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For the first time in history, the United States government has spent over $1 trillion on interest payments for the national debt within a single fiscal year, according to a report released by the Treasury Department on Thursday. The national debt currently stands at a staggering $35.3 trillion.
With the Federal Reserve maintaining benchmark interest rates at their highest levels in 23 years, the government has allocated $1.049 trillion to debt service—a 30% increase compared to the same period last year. This amount is part of a projected $1.158 trillion in total interest payments for the full fiscal year.
After accounting for the interest the government earns on its investments, net interest payments have reached $843 billion. This figure surpasses all other federal expenditures except for Social Security and Medicare, highlighting the growing financial burden of servicing the national debt.
The surge in debt service costs coincides with a significant increase in the U.S. budget deficit, which expanded by $380 billion in August alone. This marks a sharp reversal from the $89 billion surplus recorded in the same month last year, a surplus that was largely attributed to accounting adjustments related to student debt forgiveness.
With just one month remaining in the federal government’s fiscal year, the cumulative deficit has nearly reached $1.9 trillion—a 24% increase from the same point a year ago. The swelling deficit underscores the fiscal challenges facing the nation as it grapples with rising interest costs and increased spending.
In response to evolving economic conditions, the Federal Reserve is widely expected to adjust interest rates in the upcoming meeting next week, potentially lowering them by a quarter percentage point. Anticipation of future rate adjustments has already influenced the bond market, with Treasury yields experiencing declines in recent weeks.
The benchmark 10-year Treasury note recently yielded approximately 3.7%, reflecting a decrease of more than three-quarters of a percentage point since early July. This decline indicates shifting investor expectations regarding monetary policy and economic outlook.
About the Treasury Department
The U.S. Department of the Treasury is responsible for promoting economic prosperity and ensuring the financial security of the United States. The Department is responsible for a wide range of activities, including advising on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions.
